August 9, 2012 / 1:35 AM / 5 years ago

SEC to settle ICP Asset Management CDO fraud case

3 Min Read

Aug 8 (Reuters) - The U.S. Securities and Exchange Commission has reached a settlement agreement in principle in a lawsuit accusing New York financial services firm ICP Asset Management and its founder of fraudulently managing four collateralized debt obligations.

The settlement of the case, one of several the SEC pursued after the financial crisis and the collapse of the U.S. housing market, was disclosed in a letter by lawyers for the parties filed in U.S. District Court in Manhattan on Wednesday.

It had been the first case by the commission against a CDO collateral manager.

Lawyers for the SEC, ICP and individual defendants including founder Thomas Priore said they anticipate submitting the settlement for court approval by the end of August.

In light of the settlement, U.S. District Judge Lewis Kaplan said he would delay a trial initially scheduled to start Sept. 11 to Sept. 25.

Terms of the settlement were not disclosed. The letter said the agreement is subject to approval of the SEC's five commissioners. Any settlement would also be subject to Kaplan's approval.

Kevin Callahan, a spokesman for the SEC, declined comment. Malachi Jones, a lawyer for Priore, did not respond to requests for comment.

The SEC sued ICP and Priore in June 2010, claiming they violated federal securities laws by engaging in improper transactions to defraud four multibillion-dollar "Triaxx" CDOs invested mostly in mortgage-backed securities of tens of millions of dollars.

An amended complaint filed in June 2011 added new charges, claiming that Priore had sought to transfer millions in real estate assets after finding out the SEC planned to sue him. The new complaint added Priore's wife Lori and his friend Bertrand Smyers to the case.

The settlement would also cover claims against Lori Priore and Smyers. Their lawyers, S. Robert Schrager for Lori Priore and Simon Miller for Smyers, did not respond to requests for comment.

Before the settlement was reached, Kaplan on July 31 denied the SEC's request for partial summary judgment on the bulk of its allegations against Priore. Kaplan said at the time he would explain his reasoning in a court opinion later on.

The case is SEC vs. ICP Asset Management, LLC et al. U.S. District Court, Southern District of New York, No. 10-4791.

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